US new home sales jump in March; supply still rising
[WASHINGTON] Sales of new US single-family homes increased more than expected in March as buyers rushed to take advantage of a decline in mortgage rates, but a gloomy economic outlook poses a challenge to the housing market recovery.
New home sales jumped 7.4 per cent to a seasonally adjusted annual rate of 724,000 units last month, the highest level since September 2024, the Commerce Department’s Census Bureau said on Wednesday (Apr 23). The sales pace for February was revised down to a rate of 674,000 units from the previously reported 676,000 units.
Economists polled by Reuters had forecast new home sales, which make up about 14 per cent of US home sales, climbing to a rate of 680,000 units. New home sales are counted at the signing of a contract. They increased 6.0 per cent on a year-on-year basis in March.
The average rate on the popular 30-year fixed mortgage declined to 6.65 per cent in March from 6.76 per cent at the end of February, data from mortgage finance agency Freddie Mac showed.
But the rate has since been rising, touching a two-month high of 6.83 per cent last week as President Donald Trump’s ever- shifting tariff policy stoked fears of sluggish economic growth and high inflation, which have led some economists to doubt that the Federal Reserve would resume cutting interest rates in June.
Fed chair Jerome Powell last week suggested the US central bank was in no rush to move on rates, but cautioned that Trump’s trade policy risked pushing inflation and employment further from the Fed’s goals.
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Trump’s attacks on Powell, which raised worries over Fed independence, have contributed to investors dumping US assets, including Treasuries. Trump on Tuesday backed off from threats to fire Powell, boosting asset prices and lowering Treasury yields. Mortgage rates track the yield on the benchmark 10-year Treasury note.
The National Association of Homebuilders estimated last week that the latest round of tariffs, including boosting duties on Chinese imports to 145 per cent and imposing a 25 per cent levy on foreign steel and aluminium had increased construction costs by US$10,900 per home. They expected weaker home sales over the next six months.
In March, new home sales increased in the densely populated South and the Midwest. They, however, fell in the Northeast and West. The median new house price dropped 7.5 per cent to US$403,600 in March from a year earlier. Most of the homes sold last month were below US$499,999.
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The inventory of new homes last month increased 0.6 per cent to 503,000 units, the highest level since November 2007. At March’s sales pace it would take 8.3 months to clear the supply of new houses on the market, down from 8.9 months in February. REUTERS
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